SEBI asks small and mid-cap funds to disclose more about risks to investors
- March 1, 2024
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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SEBI asks small and mid-cap funds to disclose more about risks to investors
Subject: Economy
Section: Financial markets
Context:
- India’s market regulator has asked the country’s asset managers to give investors more information about the risks associated with their small and mid-cap funds, according to a fund manager and two people with knowledge of the matter.
More on news:
- The Securities & Exchange Board of India (SEBI) has also been reviewing stress tests conducted by such funds.
- Small and mid-sized funds have seen high inflows, causing concern among authorities about how they would hold up in the event of a sharp market selloff.
- Heavy inflows have sent the Nifty small cap 250 index surging 71 per cent over the past 52 weeks and lifted the Nifty midcap 100 index 64 per cent.
- That far exceeds the benchmark Nifty’s 28 per cent rise.
- Mutual funds tend to keep between 1 percent and 5 percent of their assets as cash as a prudent measure to meet outflows, according to public documents.
- There is, however, no minimum regulatory requirement.
Definitions of various Caps:
- Small-cap stocks are defined as those with market caps of less than 50 billion rupees .
- Mid-cap stocks are those with market values of between 50 billion and 200 billion rupees.
- Large-cap stocks are usually well-established and dominant companies in their respective industries as their market capitalisation is over Rs. 20,000 crores(200 Billion rupees).
- The term “cap” in large-cap refers to market capitalization.